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Weekly Wrap: Jobs report, Federal Reserve and Grexit

Fri, 2015-06-05 13:00

Joining Kai to talk about the week's business and economic news are Leigh Gallagher of Fortune and the Wall Street Journal's John Carney. The big topics this week: May's strong jobs report, the possibility of a raise in rates by the Federal Reserve and Greece's relationship with the eurozone. 

Who we're watching in 'Silicon Valley'

Fri, 2015-06-05 13:00

Lots of people are trying to make it big in Silicon Valley — tech companies, startups, entrepreneurs and venture capitalists. We talk about them quite a bit, but there’s one person in Silicon Valley we’re watching more closely than any other … a guy by the name of Richard Hendricks ... OK, so he’s not real.

Richard Hendricks is the lead character in HBO’s hit series "Silicon Valley," which is near the tail-end of its second season. It’s the story of a group of programmers that seem to be just on the brink of making the big deal. Thomas Middleditch plays Richard Hendricks. 

On his breakout role:

It’s great. It’s all very positive. People seem to be fans of the show, which is nice. There is that sort of feeling, I think, when someone comes into a bigger role, it sort of feels like to other people that you sort of came out of nowhere … like I just decided to start acting the day I got cast. But no, I’ve been at it for a while.

On his character Richard Hendricks:

He’s a very tunnel-vision, focused programmer, as a lot of those guys are. When they get in the zone and they start writing code, they could write for hours and hours and hours, potentially days on end. You know, spending a lot of time in your own world in front of your computer, some things suffer, and for him it’s a bit of social skills. So he’s a little bit of a Nervous Nelly and a little bit of an Awkward Arnold.

On being an actor right now:

There’s just so much opportunity and so much variety going on with a million different networks, and even internet networks. And they’re all trying to do their own thing. They’re all trying to make their own stamp, and a lot of these networks’ mandates are, “We want to be original. We want to move away from network formula.” Yeah, I would say it’s a great time to be an actor on TV.

Listen to Marketplace's previous interview with Middleditch below: 

Sweater snafus unravel J.Crew's quarterly earnings

Fri, 2015-06-05 13:00

The slump isn’t over for fashion retailer J.Crew, which continues to struggle with disappointing sales. The company reported first quarter earnings yesterday. Sales were off by more than 5 percent from the previous period last year.

What's behind the drop in sales? 

Things started unraveling because of a sweater. As in the cardigan that customers complained didn’t fit well. And two other sweaters — one it bought too much of, one it ran out of. Now you might be thinking, “They’re sweaters. What gives?”

“To their customers, it’s a big deal, it’s a staple,” says Ken Morris, founder of Boston Retail Partners. Staples are what J.Crew built its success on, so the sweater fiasco turned into huge losses. 

“I think that J.Crew has had a lot of bad customer moments,” Morris says.

Like when it stopped selling its classic ballet flat, a favorite among shoppers. They’ve since brought it back. But it’s not clear those customers will come back. Dale Achabal, the executive director of the Retail Management Institute at Santa Clara University, says consumers have a lot of choice when it comes to shopping.

“They don’t have long-term loyalty, and that’s a big challenge,” Achabal says.

Another challenge has been some very un-J.Crew-like offerings. Case in point: the leopard print baseball cap. Marshal Cohen, chief retail analyst with the NPD Group, says consumers like change, but not too much, and that’s especially true of J.Crew customers.

“They’ll buy on impulse some of the new things, but they still have to find their tried-and-true product,” Cohen says.

The good news? He says customers will forgive a bad season or two. To get things started, J.Crew stores today offered 40 percent off items already on sale. And to sweeten the deal, they gave out free donuts this morning. It is, after all, National Donut Day.

Accountability at question in private policing

Fri, 2015-06-05 13:00

It was a typical day. Until Peter Dixon, in his late forties, married with two kids, went jogging after work and passed the Acorn housing projects — part of his regular route.

It was December 2011, and Dixon, who works cleaning BART trains, says two unmarked cars cornered him.

“They surrounded me so quickly, I didn’t have nothing to do but stop,” he says.

Four men got out of the cars. Dixon says he thought he was about to be confronted by undercover police. They weren't in uniform and didn't have badges. Dixon says they accused him of having drugs.

"I’m a citizen," he says he told them. "And you got me mistaken with someone else.”

Though they didn't disclose the name of the company they were working for, the four men were private security guards with Personal Protective Services, a company hired to patrol the Acorn Projects. There was an altercation and Dixon says he knew he'd crossed into territory that was "real bad."

"The most thing I was trying to do now, is trying to get the people around me to look and watch."

Dixon was handcuffed, and in the process his wrist was broken. The police were called. Eventually Dixon says the private guards admitted a mistake had been made.

“I was like, 'Yeah, you did mess up. But I’m not leaving till you get the real police to come,' ” he said.  

Dixon ended up suing the Oakland Police and the Personal Protective Services. But it wasn’t like walking into a public police department to file a complaint. His lawyer, Michael Haddad with Haddad & Sherwin, a civil rights law firm in Oakland, says they had to hire an investigator just to find out the name of the company. Neither Personal Protective Services nor the company's law firm responded to a request for comment for this story. The case was settled, and Dixon was awarded $135,000.  

Robert Kane, the head of the Criminology and Justice Studies program at Drexel University, says the issue of public versus private police is a growing problem.

“The private police sector dwarfs the public police sector,” he says. 

Sometime in the last century the private security industry began to grow – fast. Now for every two police officers there’s an estimated three private officers. And, they’re often in places you used to see public cops: courthouses, college campuses, even housing projects like the one Dixon jogged past. Kane notes there’s a simple reason — money.

"Frankly, it’s just the economics of it," he says. “The government entities treat the private police organizations generally as private contractors. So as a result of that, it’s really a lot cheaper."

Most private guards don’t receive anywhere near the training regular police do, and the applicant pools for the two jobs can be very different, Kane says.

A government worker, like a police officer, is likely to receive retirement and health benefits, and often, a pension. But the earnings of private contractors are a lot slimmer. "The quality of employee tends to be less for security officers than for police officers," Kane says. If you want to be a police officer, there are background investigations and medical and psychological exams.

"If you look at the applicant pools for police departments, across the nation, frequently you’ll see 1 in 100 applicants actually gets the job,” he says. “Many people who apply for those police jobs do not get them.”

Kane says a lot of those who don’t make it as a public cop end up working private security. But because they get paid so much less, the turnover rate for the industry is high.

David Sklansky, a professor of criminal law and procedure at Stanford University, says there's another issue. When you try to privatize a responsibility normally shouldered by the government, it can complicate things.

“The police work for everyone," he says. "They don’t work for shop owners or wealthy home owners more than they work for anyone else."

But when an apartment complex hires a private security firm, the formula can change.

"They may be very accountable to the owners of the apartment building or their residents in a gated community, but they’re not as accountable to the people that they accost and ask for identification,” he says.

People like Charles Dixon. Sklansky says this is the crux of the issue. Public agencies are responsible to the public. Private companies are responsible to the people who pay them.

“The mission of a private security agency, like the mission of any private business, is to provide a service for the people who are paying for it in the hope of earning a profit.”

It's within the auspices of private companies that private police have the least regulation of all, says Stephen Rushin, a professor of criminal law at Alabama University School of Law who studies how states regulate the industry. 

“Those officers are the ones that most likely to execute an arrest, most likely to execute a search, most likely to interrogate the employees of a company," he says. "They’re also the ones who are not actually regulated by most states' law, as it currently stands.”

In 2011, Rushin published a study in the West Virginia Law Review identifying what he says is a problem: only six states regulate private police hired to work inside companies.

And even when private police have the best of training — for example, when an off-duty cops takes on extra work as private security — things can get worse quickly.
 
“Suddenly they’re no longer necessarily working for the public good," says Rushin. "They’re working to protect the economic interests of their now private employer.”
 
Without regulation by a police department, notes Rushin, cops taking on extra gigs can be a breeding ground for corruption.

Kane says police officers doing double duty can raise questions that seem impossible to answer.

“If they're a full-duty police officer but they're off duty and working for a private security firm, and they have to intervene in a situation, the question is, 'Whom are they working for?' ”
 
Are they working for the public or the company that hired them? Do they follow company rules or police rules? While moonlighting cops are common, notes Kane, a lot of departments won’t let their officers take outside security work. 

But at the same time, says Rushin, private police can be helpful. It means more individuals working to enforce the law. He says they exist because there’s a need for them in communities with shortages of police, like in Oakland, California.

Mark Lerner, president and CEO of Epic Security, a company offering guards in New York and New Jersey, says demand for private security is growing steadily. But he points out that while private guards are not as well trained as the regular police, "private security guards are not the same occupation as public police."

In New York and New Jersey, Lerner says, armed private officers need to complete about 70 hours of training in the first year. He knows there can be problems, he says, but the vast majority of incidents are handled properly. And he notes, there's no shortage of problems with regular police too. But if someone does have a problem, it’s easier to file a lawsuit against a private security company than against the public police, Lerner says.

“So people have a recourse to the government agencies that regulate private security, and they certainly have recourse to the courts if they feel they’re entitled to damages,” he says.

But for Sklansky, the issue isn’t who’s entitled to damages, it’s that everyone is entitled to a public police force.

At last count, there were about 700,000 public police officers across the country. There are an estimated 1 million private cops.

“When we allow private policing to displace public policing, we are retreating from a broad public commitment to ensure that everybody, no matter how rich or poor, is protected against crime or violence,” says Sklansky.

Data hacks beget more data hacks

Fri, 2015-06-05 13:00

Federal investigators are reporting that the records of more than 4 million people have been hacked at the government’s human resources department, the Office of Personnel Management.

The government suspects Chinese hackers took names, addresses, financial information and possibly Social Security numbers. This latest hack follows a recent trend in cyber crime that targets medical records and personnel files.

“They're incredibly valuable when we want to steal identities or impersonate somebody to steal something else,” says John Kindervag, a security analyst with Forrester Research.

Kindervag says these kinds of personal data, such as a Social Security numbers or a mother’s maiden name, can be used to gain deeper access.

“So if you can take over somebody's identity, you can get unfettered access across big swaths of any network that they might have credentials for.”

The threat these kind of hacks pose is exacerbated by the fact that they expose not just the individual’s network, but those of their coworkers, customers or any company they have contact with, says Steve Manzuik, director of security research at Duo Security.

“If you have additional data, especially personal data on your target, you can now craft a very targeted phishing email that would be very convincing and hard for a regular user to determine if it's real or fake,” Manzuik says.

Even if this stolen data isn’t being used to rip us off now, there is no way of telling how it might be used in the future, says Steve Pao, general manager of security business at Barracuda Networks.

“One of the things we've learned is that these hackers are very patient. And so right now, people are on high alert. It could be five years from now or 10 years from now that the real financial impact could be realized," Pao says.

In addition to stealing things like intellectual property, Pao notes there is also a legitimate security threat of espionage from nation states or putting sensitive information in the hands of terrorists.

The economics of moving for a job

Fri, 2015-06-05 10:36

Next week on Marketplace Weekend, we're talking about migration. We want to know, what would it take for you to leave your current life and move for a job?

Is it money? Cost of living? Tell us your stories of moving for a job, did it work out? Let us know. Reach out on Marketplace's Facebook page, send us an email, or reach us on Twitter, @MarketplaceWKND

Tech IRL: Online Communities

Fri, 2015-06-05 10:07

Ever heard of ASMR? It stands for audio sensory meridian response. First a few and then a lot of "vloggers," or video bloggers, create videos, like this one, to cater to the ASMR community:

Ilse, who goes by the name TheWaterwhispers, has had over 27 million views over the last three years, explains ASMR and her channel are "for people who enjoy calming voices (whispering, soft speaking), different sounds (tapping, scratching, crinkles ext), personal attention role plays (haircut, scalp massage ext), seeing some perform a simple task (doing the laundry cleaning different object ext) and much more!" 

These videos are pretty popular in some groups. How popular? Popular enough to make money doing it? Lizzie O'Leary poses this question to Marketplace Tech host Ben Johnson, who explains the business behind YouTube stars. 

Living at risk in Baltimore

Fri, 2015-06-05 09:53

Conversations about communities sometimes happen only in crisis.

This spring, reporters descended on Baltimore after Freddie Gray's death and the subsequent unrest. Some wrote and spoke only of the immediate events. Some spent time examining the legacies of poverty and unequal investment that exacerbated divides between different communities in the city.

Some, like our Noel King, followed the money, tracing the aftermath of a $100 million investment in the city in the 1990s. 

When we were brainstorming our show about communities last week, we wanted to make sure we talked about Baltimore. Both because it's important to keep covering a story after a lot of your colleagues leave (Marketplace is particularly lucky to have a reporter, Amy Scott, who lives in Baltimore). And because the harder stories — important, incremental, complex — require hearing from the community directly.

So when I got the chance to interview Munir Bahar, we jumped at it.

Bahar is an accountant-turned-activist and leads two programs: COR Community and the 300 Men March. Both have significant reputations in Baltimore and work with at-risk communities. I wanted to talk with him about the aftermath of the protests and violence this spring, and the city's spiralling murder rate. A different kind of crisis.

I also wanted to talk with him about some pretty sobering numbers about growing up in Baltimore that come from some of the best research about economic mobility.

Economists Raj Chetty and Nathaniel Hendren, who've done groundbreaking work on mobility, have stark numbers on Balitmore as laid out in a Washington Post piece.  

What they translate to: every year a poor boy lives in Baltimore, his future earnings decline by 1.5 percent.

When I discussed those numbers with Bahar, he said he couldn't accept them, in part because every child he works with needs to be seen as having a chance. It's essential to his mission.

To me, motivating children, keeping them safe and encouraging them to succeed in their community ... well, that's exactly where the economy collides with real life. 

PODCAST: Robust jobs report for May

Fri, 2015-06-05 03:00

With the jobs report out for May, we can say the U.S. jobs market is performing stronger than expected. More on that. Plus, we'll talk about news that members of OPEC decided today to keep production right where it is, without cuts. And Marketplace's senior economics contributor Chris Farrell discusses this week’s SCOTUS ruling on bankruptcy and second mortgages.

Teens' summer job prospects improve

Fri, 2015-06-05 02:00

Summer job prospects for teenagers are better than they’ve been in years.

At a Dairy Queen on Division Street in Southeast Portland, Oregon, there’s a ‘Now Hiring’ sign up next to the drive-through window. The burger-and-ice-cream joint is across the street from a big public high school, and manager Chris Mooneyham says some of the students who come to eat after school also have summer job applications in.

Dairy Queen in Portland, Oregon. (Mitchell Hartman/Marketplace)

“We’ll probably hire three or four good people, about 25 to 30 hours a week,” Mooneyham says. “It starts at minimum wage. Once you’re trained you get up to .50 cents to a dollar an hour raise.” He's hoping any students he hires will stay around and keep working once school starts again in the fall. 

The teen unemployment rate soared during the recession and peaked in late 2009 at 27.2 percent. It’s now down to around 17 percent.

Raghu Manavalan

But Valerie Wilson at the Economic Policy Institute says there are still plenty of challenges. “There’s much less federal investment in youth employment programs and services,” she says. “So it is almost entirely on the private sector to provide summer employment opportunities.”

Fewer teens than ever are trying to work these days. Many go to summer school or do internships instead. And older people are still taking a lot of part-time and seasonal jobs typically done by teens, because they need the work.

Bird flu means fewer eggs for commercial operations

Fri, 2015-06-05 02:00

The avian flu epidemic wreaking havoc at poultry farms is causing the supply of eggs to tighten. It has cost farmers about 35 million egg-producing hens. The impacts on commercial egg buyers are most acute.

“Of that 35 million, about 90 percent or so were producing for the breaker eggs market,” says Brian Moscogiuri, an egg market reporter at the research firm Urner Barry. (Breaker eggs are sold in liquid form; they’re mixed into a lot of commercial baked goods and products.)

“The breakers, the egg processors, the egg product side has felt the brunt of the impact,” says Moscogiuri.

Courtesy:Brian Moscogiuri/Urner Barry

He says prices for breaker eggs are up more than 200 percent since the end of April. That's causing headaches for food manufacturers, bakeries and restaurants. Some companies reliant on breaker eggs are now buying carton eggs instead, pushing up prices for the rest of us.

McDonald's says it's still able to meet its egg need, even though one of its suppliers has been affected by the avian flu outbreak. But the Texas-based chain Whataburger is struggling and is scaling back the hours it serves breakfast.

Experts say businesses reliant on eggs might start importing them, or they could turn to soy-based products as substitute ingredients.

“We'll start to see the markets find some substitutes,” says Brian Buhr, dean of the College of Food, Agricultural and Natural Resource Sciences at the University of Minnesota.

Courtesy:Brian Moscogiuri/Urner Barry

Apple is behind on streaming, but it has a secret weapon

Fri, 2015-06-05 02:00

How many times can one company reshape the way we consume music? That's the question Apple is facing Monday, when it's expected to announce two new music streaming options in an attempt to make up the ground it's lost to the likes of Spotify and Pandora.

Apple didn't invent digital downloads, but arguably, it perfected them. The iTunes store is still a force, but it's starting to slip, with sales dropping double digits last year. The streaming is market is small, but crowded and growing.

Let's take a look at what we know so far about Apple's potential entrance into streaming:

What's an Apple streaming service look like?

Apple has made one modest attempt at streaming already with iTunes Radio. The Pandora competitor has been quietly expanding, but it's so far failed to make much of a splash. Apple is expected to relaunch the service with more distinct channels and big names attached like the BBC's Zane Lowe, Trent Reznor, Drake and Pharrell Williams. That's important for securing Apple's hold on streaming radio overseas.

"The problem with Pandora — because of rights issues and how [little] money they have — is they operate in very limited markets," says music industry analyst Bob Lefsetz. "So one would anticipate by virtue of launching in all these other markets [with] their brand name, Apple will make huge inroads and probably win in streaming radio."

But likely more lucrative is a subscription-based on-demand streaming service from Apple. Reports in the New York Times and Wall Street Journal say it'll cost around $10 per month for unlimited streaming, similar to what's available from Spotify, Tidal, and Beats Music, which Apple acquired last year.

It's not clear how long Beats Music will be around after Monday. The sale gave Apple a chance to look under the hood of an active, albeit small, streaming service and put a lot of expertise on Apple's payroll, says music technology analyst Mark Mulligan.

"Beats built a service, from the ground up, around curation and programming and editorial, which is a very different thing from what Spotify did," he says.

So what happens to the iTunes store?

Apple will essentially offer three different ways to deliver digital music: radio, on-demand streaming and downloads. The best-case scenario for Apple is that each arm will appeal to a different kind of consumer: if you like Spotify, Pandora, or your old iPod Nano, Apple will have an option for you. 

"I really think there are different customers for these different kinds of experiences, and it makes complete sense to me that Apple would want to be in all three spaces," says Serona Elton, Associate Professor and chair of Music Media & Industry at the University of Miami. 

"If I subscription service does its job well enough, you never have any reason to buy music again," say analyst Mulligan – and he thinks that shift would be acceptable to Apple. "The labels are much more concerned about Apple eating its own lunch than Apple is."

Record labels are nervous because streaming changes the economics of how we consume music, Mulligan says. The revenue is more incremental, at fractions of a cent per play, instead of $10 up front for an entire album. Unlimited streaming also means people listen with more breadth and less depth — one might enjoy a wide variety of artists but spend far less time with each. That could hurt revenue in the long run, as could free, ad-supported streaming.

Why doesn't Apple have an free on-demand option?

Apple is expected to offer some kind of free preview of its streaming service before shuttling customers to either a paid subscription service or radio. It's also reportedly urging record labels to make Spotify to drop its free tier, and attracted the attention of the FTC in the process.

About three-fourths of Spotify's 60 million users don't pay, using on-demand streaming on desktop with occasional ads. That "freemium" model is great for acquiring users and it keeps Spotify competitive, but it isn't a big moneymaker. One analysis found a play on Spotify Premium generated .68 cents in royalties on average, while free plays averaged just .14 cents.

Lefsetz says the big elephant in the room is YouTube, which has become the go-to when you want to to hear to a song without paying. Eventually users may pay $10 per month for convenient, on-demand mobile streaming, he says, but not yet.

"Eventually it's going to work out, but the rights-holders are trying to close the door on free too soon, which will cause piracy," Lefsetz says. "If Apple went with a free tier it would have a chance, but the way it is now it's not looking good."

So how will Apple pull this off?

As we saw with last year's U2 debacle, about half a billion people use iTunes, and Apple can get stuff to them very quickly. The company already has data and credit card information for those users, which would make an Apple streaming service convenient and easy to adopt. 

"People who already consider themselves 'Apple people' based on all of the devices they use [may] try it out and find it appealing enough to be worth the cost, even though they could find the same content elsewhere," Elton says. "It's not just about the content, it's about the experience."

Apple's other crucial advantage is that its not really a music company. It's a tech company with a music arm. They can afford to sell and stream music at a loss, because ultimately they're trying to sell devices. That's not true of any competitors.

"Apple can afford to throw endless amounts of money at this and not worry about whether its going to cover its costs. Spotify can't do that," Mulligan says. "Spotify is doing that, but on a limited time scale."

Service Free option? Compatibility on Android Music Quality Play songs on demand? Share playlists with friends? Offline listening option? What makes it special? Tidal No Yes Higher quality: 320 Kbps or above Yes Yes Yes Higher royalties to music creators, audiophile friendly Spotify Yes Yes Higher quality: 320 Kbps or above Yes (paid) Yes Yes Easily build and share playlists with friends Songza Yes Yes Lower quality: 192 Kbps or below No No No Extensive number of curated playlists by mood, genre, or activity Rhapsody No Yes Lower quality: 192 Kbps or below Yes Yes Yes Large music library Rdio Yes Yes Lower quality: 192 Kbps or below Yes (paid) Yes Yes Exclusive music selection Pandora Yes Yes Lower quality: 192 Kbps or below No No No Music discovery based off finely-tuned robot algorithms Beats Music No Yes Lower quality: 192 Kbps or below Yes Yes Yes Really, really cool headphones Apple Music (rumored details) Yes No Lower quality: 192 Kbps or below Yes (paid) Yes Yes Apple.

Apple's streaming service marks a sea change in music

Fri, 2015-06-05 01:58

Apple is expected to announce its long-rumored streaming music service next week during its developers' conference in San Francisco.

The service has been anticipated ever since the tech giant bought Beats, the headphone and streaming music company, last year. It is expected to cost about $10 a month, and include radio-like music channels with DJ hosts.

Apple will enter into a crowded field with established players such as Spotify and Pandora, which command the most music streaming plays.

The company is taking on that challenge as music consumption shifts from downloaded, and bought, mp3 tracks to streamed music that is either made available free through ad-supported networks or through a monthly subscription.

In May, Warner Music Group, one of the three biggest music license holders, said that streaming music revenue in the last quarter surpassed revenue from downloads for the first time, growing 33 percent.

Younger audiences, such as 20-year-old Sylvie Grace, a musician from Chicago, are increasingly streaming rather than downloading.

"I used to [download]," Grace says, "when my mom was paying ... but I haven't bought something online in a long time."

Twenty-year-old Michelle Chan, who was visiting the Apple store in downtown Chicago on a recent afternoon, says she streams music for free on Spotify, as much for the convenience as for the price.

"They have playlists all set, so you don't have to look for music. And you can type in whatever you want," Chan says, adding that she does occasionally pay to download music, but only when it is not available on Spotify.

"The trend right now is pretty clearly that streaming is growing by leaps and bounds," says David Bakula of the entertainment tracking firm Nielsen.

Single track sales of mp3s on iTunes and elsewhere are down about 10 percent so far this year, Bakula says, while the volume of on-demand streams, in which Apple has little presence, has almost doubled to more than 110 billion in the first five months of this year.

"We found that two-thirds of people are streaming music on a weekly basis," Bakula says, "It's really permeating every demographic of society."

This massive audience is fragmented among a number of disparate music services: Spotify, where they can play specific songs on demand; Pandora, which plays music in channels, curated by an algorithm; YouTube and Vevo, which stream music videos; live streams of terrestrial radio stations with DJs, and other services.

Apple could entice that fragmented audience just by making music streaming easier on the iPhone, for example, by integrating into the phone's native music app.

Colin Gillis, an analyst who tracks Apple at the brokerage firm BGC Partners, has been sounding caution about the tech giant's reliance on the iPhone for profits, and says diversifying into other revenue streams and protecting their revenue from music are both important goals.

"They should have a streaming music service. They should have a streaming video service, a la Netflix," Gillis says, adding that ancillary services are still likely to generate only a small fraction of Apple's profits in the near future.

Apple readies streaming music service

Fri, 2015-06-05 01:58

Apple is expected to announce its long-rumored streaming music service next week during its developers' conference in San Francisco.

The service has been anticipated ever since the tech giant bought Beats, the headphone and streaming music company, last year. It is expected to cost about $10 a month, and include radio-like music channels with DJ hosts.

Apple will enter into a crowded field with established players such as Spotify and Pandora, which command the most music streaming plays.

The company is taking on that challenge as music consumption shifts from downloaded, and bought, mp3 tracks to streamed music that is either made available free through ad-supported networks or through a monthly subscription.

In May, Warner Music Group, one of the three biggest music license holders, said that streaming music revenue in the last quarter surpassed revenue from downloads for the first time, growing 33 percent.

Younger audiences, such as 20-year-old Sylvie Grace, a musician from Chicago, are increasingly streaming rather than downloading.

"I used to [download]," Grace says, "when my mom was paying ... but I haven't bought something online in a long time."

Twenty-year-old Michelle Chan, who was visiting the Apple store in downtown Chicago on a recent afternoon, says she streams music for free on Spotify, as much for the convenience as for the price.

"They have playlists all set, so you don't have to look for music. And you can type in whatever you want," Chan says, adding that she does occasionally pay to download music, but only when it is not available on Spotify.

"The trend right now is pretty clearly that streaming is growing by leaps and bounds," says David Bakula of the entertainment tracking firm Nielsen.

Single track sales of mp3s on iTunes and elsewhere are down about 10 percent so far this year, Bakula says, while the volume of on-demand streams, in which Apple has little presence, has almost doubled to more than 110 billion in the first five months of this year.

"We found that two-thirds of people are streaming music on a weekly basis," Bakula says, "It's really permeating every demographic of society."

This massive audience is fragmented among a number of disparate music services: Spotify, where they can play specific songs on demand; Pandora, which plays music in channels, curated by an algorithm; YouTube and Vevo, which stream music videos; live streams of terrestrial radio stations with DJs, and other services.

Apple could entice that fragmented audience just by making music streaming easier on the iPhone, for example, by integrating into the phone's native music app.

Colin Gillis, an analyst who tracks Apple at the brokerage firm BGC Partners, has been sounding caution about the tech giant's reliance on the iPhone for profits, and says diversifying into other revenue streams and protecting their revenue from music are both important goals.

"They should have a streaming music service. They should have a streaming video service, a la Netflix," Gillis says, adding that ancillary services are still likely to generate only a small fraction of Apple's profits in the near future.

Silicon Tally: How many researchers does it take...

Fri, 2015-06-05 01:46

It's time for Silicon Tally! How well have you kept up with the week in tech news? 

This week, we're joined by Marketplace reporter Stan Alcorn.

Click the media player above to play along.

How the two-liter soda is a relic of change

Fri, 2015-06-05 01:07
$10

That's about how much Apple's new streaming music service will reportedly cost for unlimited music. The two-tiered service is likely to be announced next week. We took a closer look at what Apple might have to offer in comparison to other options in an already overly crowded music streaming market.

$488 million

That's how much the Red Cross raised for aid in Haiti following a devastating earthquake in 2010, more than any other aid organization. The Red Cross pledged to build hundreds of homes and says it's helped millions of Hatians with that money, but NPR and ProPublica's continuing investigation found that most of these claims were murky and unsubstantiated. In fact, some communities have reportedly received little or none of the promised aid.

17 percent

Summer is upon us, which means many teenagers will be looking for jobs. The good news is that teen unemployment is down to around 17 percent;  in 2009, it had soared to 27.2 percent. But experts point to other economic challenges getting in the way of young Americans and that summer gig.

3

That's how many countries don't use the metric system: Liberia, Myanmar and the U.S. There have been some changes here, but they haven't moved past the beverage aisle. The hope was that recognizable, accessible measurements like a two-liter soda would ease the transition, but somewhere along the line things stalled.

18-6

That's the vote by the Food and Drug Administration approving flibanserin. Think of it as "Viagra for women." As the New York Times reports, the vote followed an intense lobbying campaign that accused the FDA of gender bias when considering drugs that treat sexual performance.

How the 2-liter soda is a relic of change

Fri, 2015-06-05 01:07

$10

That's about how much Apple's new streaming music service will reportedly cost for unlimited music. The two-tiered service is likely to be announced next week. We took a closer look at what Apple might have to offer in comparison to other options in an already overly crowded music streaming market.

$488 million

That's how much the Red Cross raised for aid in Haiti following a devastating earthquake in 2010, more than any other aid organization. The Red Cross pledged to build hundreds of homes and says it's helped millions of Hatians with that money, but NPR and ProPublica's continuing investigation found that most of these claims were murky and unsubstantiated. In fact, some communities have reportedly received little or none of the promised aid.

17 percent

Summer is upon us, which means many teenagers will be looking for jobs. The good news is that teen unemployment is down to around 17 percent;  in 2009, it had soared to 27.2 percent. But experts point to other economic challenges getting in the way of young Americans and that summer gig.

3

That's how many countries don't use the metric system: Liberia, Myanmar and the U.S. There have been some changes here, but they haven't moved past the beverage aisle. The hope was that recognizable, accessible measurements like a two-liter soda would ease the transition, but somewhere along the line things stalled.

18-6

That's the vote by the Food and Drug Administration approving flibanserin. Think of it as "Viagra for women." As the New York Times reports, the vote followed an intense lobbying campaign that accused the FDA of gender bias when considering drugs that treat sexual performance.

WikiLeaks offering $100,000 for copy of the TPP

Thu, 2015-06-04 13:00

One last mention of the video version of our interview with President Obama: find out why we don't let him hold the microphone all by himself.

Oh, and there's some good trade policy stuff in that interview, too.

In other news: Wikileaks still has that $100,000 reward out for a copy of the Trans-Pacific Partnership.

Their crowdfunding of it isn't working out so well.

About $47,000 had been raised as of Thursday afternoon.

This phone and TV merger is all about spectrum

Thu, 2015-06-04 13:00

There once was a time when we got our phone service from the phone company, and our cable TV from the cable company, and our wireless from a cellphone company.

Then, along came bundling. But these days, market growth for everyone hinges on one factor — wireless spectrum, the capacity to stream loads of content to customers.

So now entire companies are getting bundled. Merger talks between Dish Network and T-Mobile are the latest in a flurry of deals that could reshape the telecommunications industry.

“The deal makes sense. It makes sense for both of them,” telecommunications analyst Jeff Kagan said.

What all of these deals come down to is reaching consumers on their wireless devices.

“Instead of it being new and a novelty, all of the competitors are going to be jumping into the same space offering the same kind of delivery methods because that's what customers want, and if you don't offer it, you're going to go out of business,” Kagan said.

But unlike previous mergers, say, between your internet and cellphone company, to roll out wireless streaming you need spectrum—lots of it. Think of it as the invisible signal that delivers the content to your device.

“You’re really seeing a bit of an arms race right now, or maybe a land grab, in terms of getting some of the spectrum under ownership,” William Blair and Company senior analyst Jim Breen said.

Spectrum, Breen notes, is a finite resource, there is only so much, and Dish has been buying up spectrum at government auction for years.

What Dish doesn’t have is a wireless carrier. T-Mobile has the wireless network and wants more spectrum.

“It would put them on par with AT&T and even slightly ahead of Verizon in terms of the total spectrum capacity that they have,” Breen said.

Breen said this marriage of a TV company with a wireless carrier has raised concerns from regulators in the past. Those fears seem to be waning, as many expect the government to soon okay the proposed $49 billion merger of AT&T and Direct TV.

China may join the TPP...but it'll take a while

Thu, 2015-06-04 13:00

President Obama, in an interview with Kai Ryssdal yesterday, revealed that the U.S. and China have been in talks about the Trans-Pacific Partnership. Andy Rothman, investment strategist at Matthews International Capital Management, analyzes the impact of China joining the TPP.

On Chinese and U.S. conversations about the Trans-Pacific Partnership:

These talks, I think, are at a very preliminary stage largely because the bar that the U.S. is setting for countries to join the TPP is pretty high. At the same time, we need to keep in mind, that there’s a lot of other stuff going on out there. The Chinese and the U.S. are having much more detailed conversations about a bilateral investment treaty known as a BIT and that’s likely to happen a lot earlier than China joining the TPP.

On who writes the rules:

What China wants to do is have a hand in writing the rules. That’s really what trade negotiations are about. It’s everyone getting together and writing the rules, and in fact that’s worked really well for us in the past…since China has joined the WTO, U.S. exports to China are up more than 600 percent whereas during that time, U.S. exports to the rest of our major trading partners are only up by 100 percent.

On the U.S. including China in the TPP:

 I doubt that the TPP will even come to life without China in the next couple of years. It’s going to take time, but in the meantime, we need to make sure that we keep bringing China into more trade agreements like the bilateral investment treaty, because these have always proven to be good for the U.S.

 

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